Here’s why Ripple’s XRP is ripe for a bearish breakdown

Ripple’s token rebounded after falling as low as $0.5078 on October 3 following the announcement of its new US dollar stablecoin.

Ripple (XRP) was trading at $0.5500 and grew its market cap to $31.2 billion, becoming the seventh largest cryptocurrency.

Despite this, XRP has underperformed most cryptocurrencies, falling 6.3% this year. In contrast, Bitcoin (BTC) increased by 54.4% while Pepe (PEPE) increased by almost 800%.

Ripple has reached many milestones this year. He was fined just $125 million in his long-running case with the Securities and Exchange Commission; this was much lower than the $2 billion originally requested.

Ripple also launched the RLUSD stablecoin as it aims to compete with rivals like Tether, Circle, and PayPal. As reported last week, the stablecoin will initially be available on various platforms such as Uphold, Bitstamp, and MoonPay.

Stablecoins are a profitable business model in financial services, as Tether’s earnings show. Recent filings have revealed that Tether is more profitable than Blackrock, which manages over $11 trillion in assets.

Stablecoin issuers generate income by investing their funds in low-risk assets such as Treasury bonds. But the challenge for new issuers is to compete with Tether, which has $120 billion in assets. PayPal’s PYUSD, for example, has just $632 million in assets, making it the ninth largest stablecoin.

Ripple also introduced the XRP Ledger, an open-source blockchain designed to be a better alternative to Ethereum and Solana. Despite initially seeing strong growth, the total value locked on the network remained stable at around $14.6 million. However, data from Santiment shows that the number of wallets on the chain has increased recently.

🤯📈 XRP Ledger showed a significant increase in the number of active wallets, reaching 35,799 unique wallets with at least one transfer in a single day; This is the highest number in more than 3 months. Additionally, 3,858 new wallets were created in a single day; This is the highest number in more than 7 months! pic.twitter.com/DcwTzh8NcE

— Santiment (@santimentfeed) October 20, 2024

There may be a downward trend in the XRP price. XRP price chart | Source: TradingView

Ripple’s token has risen gradually this month. It moved below the bearish Ichimoku cloud on the daily chart.

XRP also formed a bearish flag pattern, characterized by a tall flagpole and a flag-like pattern. The flag section resembles a rising wedge, which is another bearish sign.

Ripple remains below the 50-day moving average and formed a double top formation at $0.6592. Therefore, the token is likely to trend downward in the near term. In such a case, the next point to watch would be $0.5021, which is the neckline of the double top formation, which is 8.50% below the current level.